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ARCHIVE NEWS ITEMS 2008:

 

Change to annual contribution limitation for 2009.

High deductible health plan for 2009.

Important Changes to 2008 Payroll Taxes
2008 Business standard mileage rate
increases for Last Half of Year

New relief for late S corporation elections.

Wage base for computing the Social Security tax rises

The Federal Insurance Contributions Act
The FICA tax rate for employees and employers


 

Change to annual contribution limitation for 2009.

For calendar year 2009, the limitation on deductions under Code Sec. 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $3,000 (up from $2,900 for 2008). For calendar year 2009, the limitation on deductions under Code Sec. 223(b)(2)(B) for an individual with family coverage under a high deductible health plan is $5,950 (up from $5,800 for 2008).

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High deductible health plan for 2009.

For calendar year 2009, a "high deductible health plan" is defined under Code Sec. 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,150 for self-only coverage (up from $1,100 for 2008) or $2,300 for family coverage (up from $2,200 for 2008), and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $5,800 for self-only coverage (up from $5,600 for 2008) or $11,600 for family coverage (up from $11,200 for 2008).

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Important Changes to 2008 Payroll Taxes
Download this PDF file to learn about payroll tax changes.


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Business standard mileage rate increases
for Last Half of 2008

IRS has announced that the optional mileage allowance for owned or leased autos (including vans, pickups or panel trucks) will increase 8¢ from 50.5¢ to 58.5¢ per mile for business travel from July 1, 2008 to Dec. 31, 2008 to better reflect the real cost of operating an auto in this period of rapidly rising gas prices. The rate for using a car to get medical care or in connection with a move that qualifies for the moving expense will also increase 8¢ for the last half of 2008 from 19¢ to 27¢ per mile.


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New relief for late S corporation elections.

New IRS guidance provides an additional simplified method for taxpayers to request relief for late S corporation elections. Specifically, it allows small businesses that missed filing Form 2553, Election by a Small Business Corporation, before filing their first Form 1120S, U.S. Income Tax Return for an S Corporation, to file both forms simultaneously, under certain circumstances. It also contains an additional simplified method for taxpayers to request relief for a late S corporation election and a late corporate classification election intended to be effective on the same date.

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Wage base for computing the Social Security tax in 08 rises

The Social Security Administration has announced that the wage base for computing the Social Security tax (OASDI) in 2008 rises to $102,000 from $97,500 in 2007, an increase of about 4.6%. The $4,500 increase is due to an increase in average total wages.

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The Federal Insurance Contributions Act

The Federal Insurance Contributions Act (FICA) imposes two taxes on employers, employees, and self-employed workers—one for Old Age, Survivors and Disability Insurance (OASDI; commonly known as the Social Security tax), and the other for Hospital Insurance (HI; commonly known as the Medicare tax).

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The FICA tax rate for employees and employers

The FICA tax rate for employees and employers is 7.65% each—6.2% for OASDI and 1.45% for HI. For self-employed workers, the FICA tax is 15.3%Ñ12.4% for OASDI and 2.9% for HI. There is a maximum amount of compensation subject to the OASDI tax, but no maximum for HI.

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